Some Companies Hesitate to Outsource

By Chris Preimesberger |
Posted 01-28-2007

Hiring someone outside the company to store, manage and protect all a company's data is a gutsy thing to do, for any storage executive or administrator. And this decision usually is not made in a vacuum.

Virtually all companies who outsource their storage apparatus must have either the CEO, president, or a senior vice president sign off on it.

"There are two major reasons why not all companies are doing this," said Brian Babineau, a storage analyst at Enterprise Strategy Group, in Milford, Mass.

"First, there is a trust factor. Critical data often includes intellectual property, trade secrets and other information. If a primary copy of data is deleted and the service provider screws up, then there will be a big issue."

Organizations would rather have their own employees responsible for protecting this information as opposed to relying on a third-party service provider who has some level of guarantee (usually a service-level agreement), Babineau said.

"No matter what the reparations are for not achieving the service levels, if data is not backed up and a primary copy is deleted, there are far-reaching implications," Babineau said.

Reason No. 2 is security, Babineau said. There are several international and domestic information privacy regulations that are in place and many more that are being considered.

"Some organizations, like banks, hospitals, [and] retailers that create an abundance of personal and sensitive information, cannot afford for this information to be compromised by an external service provider. The risk of privacy violations far outweigh the cost benefits of outsourcing," Babineau said.

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